August 13th, 2018

Review of Ohio Property Tax Decisions and Developments

Employment Law 0

Recently, there have been several notable property tax decisions from the Ohio Supreme Court that are of interest to retailers. We summarize these decisions below.

Ohio Supreme Court Finds Kroger’s Appraiser Properly Adjusted for Small Site Size and Valued Property at Its Fee Simple Value

In Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, the Ohio Supreme Court reversed the decision of the BTA and found that Kroger’s appraiser’s valuation was the best indication of value because it was consistent with the statutory requirement that the property value be based on “the true value of the fee simple estate, as if unencumbered.”

The property at issue is a Kroger grocery store and the parcel only contains the Kroger store, and not parking for the store, due to its small size. Parking is available for the store on an adjacent parcel; however, this parcel is not owned by Kroger. The BOR found that Kroger’s appraisal was the best indication of value, based primarily upon the sales comparison approach to value including making an adjustment to the comparables properties to account for the small size of the Kroger’s property in comparison to the other properties. The BTA reversed the decision of the BOR and concluded that the adjustment to reflect the parking situation improperly removed the benefit of the parking easement from the value of the parcel.

The Supreme Court determined that the BTA erred by analyzing the facts under incorrect law and found that Kroger’s appraiser properly accounted for the property at issue by adjusting for the site size. Additionally, the Court concluded that the adjustment was consistent with statutory requirements and property valued the property at issue on a fee simple basis. Therefore, the Court reversed the BTA’s decision and reinstated the BOR’s valuation.

Ohio Supreme Court Remands Big Box Valuation Matter to Ohio Board Of Tax Appeals For Further Consideration

In Lowe’s Home Ctrs., Inc. v. Washington Cty. Bd. of Revision,  the Ohio Supreme Court vacated a BTA decision, which found value consistent with the appraiser retained by the county. Both the taxpayer and county retained appraisers to value a Lowe’s store located in rural Marietta, Ohio. The appraiser for Lowe’s opined to value at $5.7 million. The appraiser for the county opined to value at $8.8 million. The BTA found that the county’s appraisal was more probative of value because the county’s appraiser included sales of first-generation and build to suit properties subject to long term leases.

In its decision the Court found that the BTA must evaluate the evidence based upon case law decided after the BTA issued its decision. This case law established that comparable properties used to determine the fee simple market value must be adjusted to reflect any leases that may affect the sale price. The Court concluded that the BTA must make express findings about the property-rights-conveyed analysis on remand.

Vorys has significant experience in analyzing real property tax assessments and securing real property tax savings for taxpayers across the country. To discuss an analysis of the opinions of value assigned by your county auditor or county assessor, please contact Nicholas Ray to discuss further.

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